Commercial Aspects - Part 1

Renewable biodiesel offers acceptable solutions to the problems of decreasing reserves of fossil fuels and their harmfully polluting green house gas emissions. Various types of biodiesel can help in overcoming the increasing energy demand worldwide. Biodiesel has the ability to eradicate the environmental problems, such as global warming and sustainability. The emergence of biodiesel and its global adoption as the leading fuel for transportation in diesel engines without any modification has led to significant increase in the production of biodiesel globally. According to a report prepared by the World Bank in 2017, biodiesel is projected to form about 70% of the transport fuel demand by the year 2040.

Biodiesel has been produced commercially since the last more than twenty years. Biodiesel production processes and technologies have developed and evolved almost continuously. Many different raw materials, which were not considered earlier, have also been identified for the production of biodiesel. The process technologies have also now reached the stage of even producing second generation biodiesels or biofuels. The commercial production of biodiesel has spread far and wide across the globe and manufacturing plants of varying capacities have been commissioned in the past two decades. These plants have been using the locally available raw materials as well as imported ones, such as palm oil. Many countries have introduced specific regulations for blending of biodiesel in diesel fuels for automobiles. Support from the governments, favorable policies and public support can play an important role in the development of biodiesel industry across the globe. Automotive fuel formulation regulations are expected to increase the market share of biodiesel leading to increase in its demand. The consumers also consider biodiesel as a superior and cost effective alternative to fossil-based diesel. Several market estimates have indicated that the demand for diesel and gasoline will keep on increasing through the year 2040. Thus, increasing biodiesel blending in diesel fuels will eventually lead to substantial reduction in the net greenhouse gases (GHG) emissions in the long term.

Raw materials used for biodiesel, its production trends and utilization are reviewed in the next few blog articles. 

COUNTRIES AND RAW MATERIALS

China utilizes rapeseed (mustard) oil, cottonseed oil and jatropha oil as the major raw materials for producing biodiesel. It is expected that these vegetable oils will be replaced by waste vegetable oils or used cooking oils and the oil obtained from microalgae in the future. Indonesia, the largest producer of palm oil, produces and uses biodiesel made from palm oil. Biodiesel production costs in Indonesia are the lowest as compared to other countries as the fuels are being subsidized. The Indonesian Ministry of Energy and Mineral Resources (MEMR) has proposed a policy to substitute 15% and 20% of petrol and diesel fuels with bioethanol and biodiesel, respectively. Malaysia, as the second largest producer of palm oil, is also promoting biodiesel based on palm oil. At present, the country meets its B7 (i.e., 7% biodiesel in the fuel blend) biodiesel mandate. Thailand produces biodiesel mainly from palm oil, as it is the third largest producer of palm oil after Indonesia and Malaysia. Taiwan has also increased the production of biodiesel as a policy and is estimated to have produced 150 million lit of biodiesel in 2020. 

Turkey is a leading producer of cotton and sunflower seeds, whose oil is used to make biodiesel. About 21876 MT of biodiesel were produced in 2013 and is increasing. Due to increasing energy demand, biodiesel production has become an essential commodity in Iran, which mainly uses feedstocks such as canola, cottonseeds, soybean to produce biodiesel. Other potential oil sources such as olive, sesame, safflower, sunflower, corn, almond and coconut oils, are also available as biodiesel feedstocks.

Africa has the capability of becoming the single largest producer of bioenergy crops in the world for the production of biodiesel. According to the estimates by the World Bank and others, biodiesel is projected to constitute about 60% to 80% of transport fuel in Africa by the year 2030. Therefore, scientific researchers are now exploring several non-edible oilseeds, which are widespread and abundantly available in the African forests, to overcome the food security problems related to the use of edible vegetable oils for the production of biodiesel. African countries, like Ghana, Zambia, Liberia, Tanzania, Ethiopia, Nigeria, Senegal, Kenya and South Africa are emerging as the major commercial producers of biodiesel. Jatropha, Jojoba, Mahua, Castor and Karanja oils have emerged as the common feedstocks of the production of biodiesel. Jatropha is the most popular non-edible oil feedstock for biodiesel in Africa. Biodiesel potential of Jatropha has been estimated for many African countries. 

In Australia, the beauty leaf oil and castor oil have been identified as the two major non-edible oils for use as feedstock to produce biodiesel. 

How the raw materials for producing biodiesel are shifting towards more sustainable feedstocks can be seen from the trend seen in the California state in the USA. In the year 2011, tallow was consumed to make biodiesel to the tune of over one million MT. Other raw materials were negligible.  By the year 2016, consumption of other raw materials like distiller’s corn oil and fish oil increased substantially, especially that of distiller’s corn oil. Although tallow was the largest consumed feedstock, distillers’ corn oil consumption was close to tallow. About two million MT of tallow was consumed while more than 1.5 million MT of distiller’s corn oil was consumed for producing biodiesel. Consumption of used cooking oil (UCO) and fish oil also started in the same year. During 2020, the consumption of tallow reached to about 2.5 million MT, while that of used cooking oil reached to over two million MT and the consumption of distiller’s corn oil reached about 1.5 million MT, along with significant consumption of fish oil. 

HISTORICAL PRODUCTION AND FUTURE PROJECTIONS

Global biodiesel production increased by a factor of 15% during the period 2002 to 2013. It is projected to increase to 110.6 million barrels per day by the year 2035. 

Biodiesel production of selected leading countries in the year 2017 is presented in the following table.

TABLE 1: BIODIESEL PRODUCTION OF SELECTED COUTRIES (2017)

COUNTRIES BIODIESEL PRODUCTION, billion lit
USA 6
Brazil 4.3
Germany 3.5
Argentina 3.2
Indonesia 2.6
France 2.5
Thailand 1.5
Spain 1.3

India, Indonesia, China, Norway, Argentina are some of the leading countries supplying biodiesel based on rapeseed (mustard) oil to the European countries in the EU, as of 2017. A few leading companies import palm oil in large quantities and convert it to biodiesel in their production facilities in Europe. 

Biodiesel has succeeded as the first and the only EPA-recommended biofuel and demonstrated its ability to attain large scale production. In 2015, USA consumers used over 2.1 billion gallons of biodiesel, according to the US National Biodiesel Board. In the year 2014, domestic biodiesel production in the USA was 1.47 billion gallons. Biodiesel imports in 2014 were 510 million gallons which increased to 670 million gallons in 2015.

Biodiesel production in the European Union (EU, i.e., EU-28) in 2018 was reported to be 3.9 billion gallons, including that of renewable diesel. More than 990 million gallons of biodiesel were imported from developing countries in the same year. These imports were three times more than the biodiesel imports in 2017. Leading biodiesel importers in the EU are the Netherlands, Spain and Belgium, due to the large storage facilities available at their ports. Biodiesel is transported to other countries from the above countries for consumption.

Out of the total biodiesel imports of 3.329 million MT, Argentina supplied 1.648 million MT, Indonesia 0.785 million MT, Malaysia 0.435 million MT and other countries 0.461 million MT. The Netherlands imported 43% of these biodiesel imports, followed by Spain at 38%, Belgium 16% and other countries 3%. 

The projected biodiesel production by major producing countries in the year 2030, their growth index, projected consumption and blending ratios are presented in the following table.

TABLE 2: MAJOR BIODIESEL PRODUCING COUNTRIES AND PROJECTED PRODUCTION (2030)

COUNTRIES / REGIONS PROJECTED PRODUCTION, billion lit PROJECTED CONSUMPTION, billion lit BLENDING RATIOS, % GROWTH INDEX, %
USA 8  6.9 15 6
Canada 5 5 10 8
European Union 22 14 20 8
India  32.1 31.1 10 – 20  11
Brazil 5 5.6 25 6
Argentina 11 1.9 30 5
China 5 5 10 17
ASEAN 13 4.1 20 8

The above projections may be negatively impacted to some extent by the increasing use of electrical vehicles as well as hydrogen gas as automotive fuel, by the year 2030.

Commercial Aspects - Part 2

Significant data is available for various feedstocks and production of biodiesel and other biofuels, especially for the United States of America. Several energy monitoring organizations collect, analyze and project production and consumption of various fuels including biodiesel in different countries and regions. These data have been collected over the past two decades. The upward trend in the biodiesel production and utilization of unconventional  and waste products for biodiesel manufacture is evident from these data. 

The following table presents consumption of selected raw materials or feedstocks for the manufacture of biodiesel in the USA. The term biodiesel covers usual biodiesel, renewable biodiesel, renewable heating oil, renewable jet fuel, renewable gasoline, etc. The feedstocks consumed for the production of ethanol (ethyl alcohol), such as corn, sorghum, etc. are not listed here.

TABLE 1: FEEDSTOCKS CONSUMED FOR THE PRODUCTION OF BIODIESEL IN THE USA (2021-22)

[million pounds]

VEGETABLE OILS WASTE OILS, FATS AND GREASES
YEARS / MONTHS Canola Oil Corn Oil Soybean Oil Poultry Tallow (Beef) White Grease Yellow Grease
2021
January W 213 683 34 84 53 263
February 85 155 552 34 66 50 198
March 123 195 740 43 83 64 226
April W 211 700 36 93 64 248
May W 257 788 32 119 59 270
June W 241 663 19 135 70 290
July 123 237 792 21 129 59 331
August 142 199 815 18 120 55 305
September 106 167 756 18 90 54 219
October 116 217 832 15 141 67 321
November 133 244 818 17 112 49 347
December 126 301 937 20 160 51 368
TOTAL >954 2637 9076 307 1332 695 3386
2022
January 64 249 791 15 141 43 364
February W 188 741 13 130 38 306
March W 212 908 15 127 47 338
April 101 211 839 13 130 57 402

[Notes – Yellow Grease includes used cooking oil. ‘W’ – Withheld to avoid disclosure of individual company data.]

[SOURCE – U. S. EIA]

As can be seen from the monthly data above, the feedstock quantity varies significantly in many cases. This may be due to the difficulties in the availability of those feedstocks. There could also be some seasonal variations in the availability of these feedstocks. 

Among vegetable oils consumed for the manufacture of biodiesel, the soybean oil consumption is the highest at 9076 million pounds per year in 2021, in the USA. Soybean oil has remained the largest biodiesel feedstock for several years. Corn oil has the second rank with the consumption level of 2637 million pounds per year.

Among the waste oils, fats and greases, yellow grease, which includes the used cooking oil, is consumed to the tune of 3386 million pounds per year in 2021 and is the highest waste product consumed for the manufacture of biodiesel in the USA.

During the year 2021, in all more than 18387 million pounds of vegetable oils and waste oils, fats and greases were consumed for the production of biodiesel in the USA.

The following table presents data on number of biodiesel plants and total biodiesel production capacity in the designated PAD Districts in the USA, as of January 2021.

TABLE 2: BIODIESEL PLANTS AND PRODUCTION CAPACITY IN THE USA [AS ON 1 JANUARY 2021]

PAD DISTRICT NUMBER OF BIODIESEL PLANTS PRODUCTION CAPACITY, MMgal/year PRODUCTION CAPACITY, Mb/d
PADD 1 13 152 10
PADD 2 37 1483 97
PADD 3 15 580 38
PADD 4 0 0 0
PADD 5 10 194 13
TOTAL 75 2409 157

[SOURCE – U. S. EIA] [NOTE – The totals may not be equal to the sum of components due to independent rounding.]

The biodiesel production capacity measures the estimated gallons of biodiesel that a plant is capable of producing over a period of one year, i.e., 365 consecutive days, starting on the first day of each report month.

The following figure presents monthly biodiesel production in the USA during the years 2018, 2019 and 2020, in million gallons. The total production varies over different months in a year, as can be seen from the bar chart. However, the total biodiesel production has remained almost consistent over the period under consideration.

FIGURE 1 :

 

The following table lists annual biodiesel production capacity and monthly biodiesel production in the USA for the years 2019 and 2020.

TABLE 3: ANNUAL BIODIESEL PRODUCTION CAPACITY AND MOTHLY PRODUCTION IN USA [2019 AND 2020]

YEARS / MONTHS 2019 2020
Annual Production Capacity, million gallons Monthly Production of B100 grade, million gallons Annual Production Capacity, million gallons Monthly Production of B100 grade, million gallons
January 2564 144 2515 134
February 2563 131 2515 132
March 2563 141 2514 151
April 2563 152 2514 144
May 2553 155 2514 152
June 2504 142 2514 151
July 2561 159 2509 162
August 2561 156 2459 163
September 2547 142 2460 159
October 2515 144 2454 160
November 2510 127 2451 151
December 2513 133 2476 159
TOTAL (ANNUAL) --- 1725 --- 1817

[SOURCE – U. S. EIA] [NOTE – Totals may not be equal to the sum of components due to independent rounding.]

The following table presents operable biodiesel, renewable diesel and other biofuels production capacities in the USA for the years 2021 and 2022, in million gallons per year. Other biofuels include renewable heating oil, renewable jet fuel, renewable naphtha, renewable gasoline, etc.

TABLE 4: OPERABLE PRODUCTION CAPACITY OF BIODIESEL AND OTHER FUELS IN THE USA (2021 AND 2022) [million gallons per year]

YEARS / MONTHS BIODIESEL RENEWABLE DIESEL AND OTHER BIOFUELS
2021
January 2394 791
February 2394 791
March 2410 791
April 2410 971
May 2428 971
June 2428 911
July 2430 911
August 2430 911
September 2462 911
October 2461 1014
November 2389 1017
December 2244 1106
2022
January 2245 1468
February 2232 1468
March 2231 1469
April 2217 1922

[SOURCE – U. S. EIA]

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